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Treasury: 90% of wage earners will likely see higher take-home pay

Treasury: 90% of wage earners will likely see higher take-home pay

The Internal Revenue Service released guidance for employers about how much tax they should withhold from workers' paychecks in 2018 - and said it would soon offer an online calculator that employees can use to make sure the amounts are correct.

Employers should begin using the new withholding tables as soon as possible, but not later than February 15, according to the IRS notice issued Thursday.

"The Administration's monumental tax reform legislation continues to provide economic benefits for hard-working Americans. It's taxes simply being called by another name", he said.

"These new tables will help deliver the tax cuts as soon as possible to as many Americans as possible, with as little disruption as possible", Mnuchin said at the White House press briefing.

Companies have been awaiting details from the IRS following the sweeping tax overhaul passed at the end of last month that changes tax rates and brackets, increases the standard deduction and repeals personal exemptions.

Earlier this week, Wyden and Rep. Richard Neal, the top Democrat on the House tax-writing committee, asked the Government Accountability Office to analyze the new IRS tables to see if they might lead to systematic underwithholding of federal taxes from paychecks.

But for many taxpayers, they will need to assess whether the new tables really are withholding enough money so that they're not saddled with a big bill when they file their taxes next year. Specifically, the withholding tables released today are created to work with the Forms W-4 that workers have already filed with their employers.

The impact of the new tax law is expected to be a major campaign issue this year, as Republicans battle Democrats for control of the House and Senate in the November election.

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Many Americans are likely to see changes and adjustments this year in their tax payments as the law goes into effect. The online calculator will not be available until sometime next month.

For example, there is a new $10,000 limit on the amount of state and local taxes a household can deduct from federal income.

The government is requiring employers to begin using the new guidelines as soon as possible, but "no later than February 15".

The law lowers tax rates, which is the primary reason Americans will see bigger paychecks next month, but it also limits or scales back tax deductions, changes that might not be realized until Americans file their tax returns.

And roughly three-quarters of tax filers are overwithheld because they take too few allowances.

Employers must now rush to incorporate the new tax withholding tables into their payroll systems, a process that is expected to take several weeks.

"I think it's one of the more ridiculous comments to think you can take a real estate tax that you're required to make and dress that up as a charitable contribution", Mr. Mnuchin said.